ACCOUNTING GAUTENG 2025 REVISION PACK- PAPER 1 ACTIVITIES

QUESTION 1 : FINANCIAL STATEMENTS

PAPER TOPICS PAGES DATE
COMPLETED
Nov 2024 NSC  Fixed Assets
 Statement of Comprehensive Income 3-6

Nov 2023 NSC  Closing stock- FIFO

 Statement of Comprehensive Income 7-10
 Statement of Financial position
June 2024 Sup NSC  Fixed Assets
 Corrected Net profit after tax 11-15
 Statement of Financial position
Gauteng Prelim 2024  Statement of Comprehensive Income
16-19
 Statement of Financial position

QUESTION 2 : CASH FLOW STATEMENTS AND FINANCIAL INDICATORS

PAPER TOPICS PAGES DATE
COMPLETED
Nov 2022 NSC  Retained Income Note
 Income tax Paid; funds to repurchase
shares; net change in cash 20-23
 Debt equity; % ROTCE; dividends per
share
June 2022 Sup NSC  Fixed Assets Note
 Fixed assets purchased; dividends paid;
decrease in loan; net change in cash and
24-28
cash equivalents
 % mark up achieved; acid test ratio; NAV;
ROSHE
Nov 2023 NSC  Ordinary Share Capital note
 Cash Flow from operating activities; Cash
29-32
flow from Financing activities
 NAV; Dividend payout rate; ROSHE
Nov 2024 NSC  Retained income Note
 Cash flow statement
33-36
 % operating expenses on sales; stock
turnover rate; interim dividends

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 QUESTION 3 : ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS
PAPER TOPICS PAGES DATE
COMPLETED
Nov 2022 NSC  Profitability
 Dividends
37-42
 Risk and gearing
 Share capital and % shareholding
Nov 2023 NSC  Liquidity
 Financial strategies and gearing
 Dividends, earnings and returns 43-48
 Shareholding
 Directorship
June 2022 Sup NSC  Profitability
 Liquidity
 Dividends
49-54
 Risk and gearing
 Market price of shares
 Shareholding
Nov 2024 NSC  Profitability
 Dividend Payout policy
 Earnings and returns
55-61
 Financial strategies and gearing
 Shareholding and right issue
 Role of the CEO

QUESTION 4 : CORPORATE GOVERNANCE

PAPER TOPICS PAGES DATE
COMPLETED
Nov 2020 NSC  Board of Directors
62-64
 Remunerations Committee
Nov 2021 NSC  Factors or characteristics of the directors 64-67
Nov 2023 NSC  Audits
68-70
 Whistle-blowers (Informants):
Nov 2024 NSC  Audit evidence 71-73

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NOV 2024: COMPANY FINANCIAL STATEMENTS (55 marks; 45 minutes)
The information relates to Ivory Park Ltd for the financial year ended 29 February 2024.
REQUIRED:
1.1 Refer to Information B (i) for fixed assets:
Calculate the following:
1.1.1 Depreciation on equipment on 29 February 2024 (2)
1.1.2 Cost price of vehicles on 29 February 2024 (4)
1.1.3 Depreciation on vehicles on 29 February 2024 (5)
1.1.4 Profit/Loss on vehicle traded in on 1 September 2023 (5)
1.2 Complete the Statement of Comprehensive Income for the year ended
29 February 2024. (39)
NOTE: Some amounts are provided in the ANSWER BOOK.
INFORMATION:

A. Balances/totals, among others, that appeared in the books on:

29 Feb. 2024 28 Feb. 2023
R R
Mortgage loan: Phambili Bank 744 100 987 700
Equipment at cost 852 000 852 000
Accumulated depreciation on equipment 472 500 344 700
Vehicles at cost ? 1 250 000
Accumulated depreciation on vehicles ? 420 000
Trading stock 654 500
Debtors' control 516 600
Provision for bad debt ? 29 520
SARS: Income tax (provisional tax payments) 340 000
Sales ?
Cost of sales 4 780 900
Audit fees 79 000
Service fee income 1 757 700
Sundry operating expenses 119 900
Bad debts 24 780
Packing material 66 550
Salaries and wages (including contributions) 1 425 600
Insurance 100 800
Rent income 158 100
Interest income ?
Directors' fees ?
Interest on loan 149 400
Dividends on ordinary shares 250 000

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B. Adjustments and additional information:
(i) Fixed assets:
Equipment:
 No equipment was bought or sold during the year.
Vehicles:
 An old vehicle was traded in on 1 September 2023 for a new vehicle,
costing R320 000. The trade-in value received was R153 660.
The following extract of the vehicle sold was taken from the Fixed Asset
Register:
Cost price: R240 000 Date purchased: 1 July 2021
Rate of depreciation: 20% p.a. on the diminishing-balance method
ACCUMULATED
FINANCIAL YEAR END DEPRECIATION
DEPRECIATION
28 February 2022 R32 000 R32 000
28 February 2023 R41 600 R73 600
1 September 2023 ? ?

 Vehicles are depreciated at 20% p.a. on the diminishing-balance method.

 Depreciation on the old remaining vehicles was R132 720.
(ii) The company maintains a mark-up of 60% on cost. Note that goods costing
R115 000 (included in cost of sales) were sold at a mark-up of 40% on cost
to internal employees.
(iii) Physical stocktaking on 29 February 2024 revealed the following:
 Trading stock, R647 100
 Packing material used during the financial year, R58 700
(iv) Provision for bad debts must be adjusted to 5% of the outstanding debtors.
(v) Monthly insurance premiums were fixed for the past three years and were
paid up to 31 May 2024.
(vi) A tenant is renting an office from Ivory Park Ltd. Rent for this office
has been received up until 30 April 2024. Rent was decreased by 8% on
1 December 2023 on the office rented.
(vii) One employee was omitted from the Salaries Journal of February 2024. His
net monthly salary was R19 340 after 35% deductions were made for his
pension and personal tax and R2 500 deducted for medical aid. The
employer contributes 10% of his gross salary on behalf of employees
towards pension.
(viii) The company had two directors who received a combined annual fee of
R1 065 200 after their monthly fees were increased by R5 800 each on
1 August 2023. A third director joined the company on 1 November 2023
and received the same monthly fee as the other directors, excluding the
increase of R5 800 per month.
(ix) Net profit after tax, R992 160, was calculated after taking into account all the
adjustments above. Income tax is calculated at 28% of the net profit.

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4
ANSWER SHEET NOV 2024:

1.1 Calculate:

1.1.1 Depreciation on equipment on 29 February 2024

WORKINGS ANSWER

2
1.1.2 Cost price of vehicles on 29 February 2024
WORKINGS ANSWER

1.1.3 Depreciation on vehicles on 29 February 2024

WORKINGS ANSWER
Depreciation on new vehicle

Depreciation on vehicle traded in

Depreciation on remaining vehicles 132 720

1.1.4 Profit/Loss on vehicle traded in on 1 September 2023

WORKINGS ANSWER

5
NOTE: The relevant amounts calculated above, must be transferred to QUESTION 1.2,
the Statement of Comprehensive Income.

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1.2 Statement of Comprehensive Income for the year ended 29 February 2024 Nov

Sales 39
Cost of sales (4 780 900)
Gross profit
Other income
Service fee income 1 757 700

Gross operating income

Operating expenses
Audit fees 79 000
Sundry operating expenses 119 900
Bad debts 24 780

Operating profit
Interest income
Profit before interest expense
Interest expense (149 400)
Net profit before tax
Income tax
Net profit after tax 992 160

TOTAL MARKS

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6
NOV 2023 NCS: COMPANY FINANCIAL STATEMENTS (55 marks; 45 minutes)

BUHLE LIMITED

The information relates to the financial year ended on 28 February 2023. The business
sells bicycles.

REQUIRED:

1.1 Refer to Information B (ii).

Calculate the value of closing stock of bicycles using the FIFO method. (6)

1.2 Complete the Statement of Comprehensive Income for the year ended
28 February 2023. (24)

1.3 Complete the Statement of Financial Position as at 28 February 2023. (25)

NOTE: Some amounts are provided in the ANSWER BOOK.

Figures are NOT required in the shaded areas.

INFORMATION:

A. Extract: Balances and totals from the records on 28 February 2023:

R
Ordinary share capital 20 000 000
Retained income ?
Loan: Uhlula Bank ?
Debtors' control 483 110
Fixed deposit 1 500 000
Trading stock 2 125 380
SARS: Income Tax (provisional tax payments) 1 049 000
Bank (favourable) 629 000
Creditors' control 523 890
Sales 21 017 200
Cost of sales ?
Commission income 277 000
Fee income 303 000
Rent expense ?
Directors' fees 1 610 000
Dividends on ordinary shares 990 000

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B. Adjustments and additional information:
(i) The business uses a mark-up of 120% on cost of bicycles. Trade discounts
totalling R336 000 have been granted and recorded.
(ii) The following information was obtained after the physical stock count:
The first-in first-out (FIFO) method is used to value the stock of bicycles.
Purchases for the year were as follows:
NUMBER OF VALUE TOTAL VALUE
UNITS PER UNIT R
PURCHASES 5 040 10 094 050
June 2022 2 085 R1 950 4 065 750
September 2022 2 215 R2 020 4 474 300
January 2023 740 R2 100 1 554 000
NOTE:
 There were 1 009 bicycles on hand on 28 February 2023.
 40 bicycles, purchased in January 2023, were returned to the
supplier due to factory faults identified.
 A number of bicycles were stolen and must be recorded as a loss.
(iii) Commission income, R41 000, is owed to the business.
(iv) Fee income includes R47 150 for February and March 2023.
NOTE: Fee income increased by 5% on 1 March 2023.
(v) Buhle Ltd rents 150 square metres of space from Prime Storage at a
monthly amount of R330 per square metre from 1 May 2022. The
company increased the space rented by 25 square metres on 1
November 2022. Rent was paid until 30 April 2023.
(vi) Provide for the directors' fees owed.
The company's two directors, Brenda and Johan, have been employed
since 2020.
 Brenda earns R10 000 per month more than Johan, but she has not
been paid for February 2023 yet.
 Johan took unpaid leave for the last three months of the financial year.
(vii Transfer a debtor's debit balance of R2 700 from the Debtors' Ledger to his
) account in the Creditors' Ledger.
(viii) The company has invested in three fixed deposits of equal value. One of
the fixed deposits will mature on 31 May 2023.
(ix) An amount for tax is still owed to SARS on 28 February 2023.
(x) Dividends:
Interim dividends paid R990 000
Final dividends due R2 640 000

(xi) The debt-equity ratio on 28 February 2023 is 0,2 : 1.

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ANSWER SHEET NOV 2023:

QUESTION 1

1.1 Calculate the value of closing stock of bicycles using the FIFO method.
WORKINGS ANSWER

1.2 Statement of Comprehensive Income for the year ended

28 February 2023
Sales 21 017 200
Cost of sales
Gross profit
Other income 942 900
Bad debts recovered
Sundry income

Gross operating income 12 254 100

Operating expenses
Salaries and wages
Depreciation
Sundry expenses

Operating profit 4 150 300

Interest income
Profit before interest expense
Interest expense
Net profit before tax 3 737 250
Income tax (1 152 000)
Net profit after tax 2 585 250
24

9
 1.3 Statement of Financial Position on 28 February 2023

ASSETS
NON-CURRENT ASSETS
Fixed assets
Investment: Fixed deposit
CURRENT ASSETS

TOTAL ASSETS
EQUITY AND LIABILITIES
ORDINARY SHAREHOLDERS' EQUITY
Ordinary share capital 20 000 000

NON-CURRENT LIABILITIES 4 512 550

Loan 4 512 550
CURRENT LIABILITIES
Trade and other payables

Current portion of loan 420 000

TOTAL EQUITY AND LIABILITIES

25

TOTAL MARKS

55

MAY/JUNE 2024 SUP NSC COMPANY FINANCIAL STATEMENTS (55 marks; 45 minutes)

The information relates to DBN Ltd. The company sells household products. The
financial year ended on 29 February 2024.
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REQUIRED:

1.1 Refer to information A.

The bookkeeper has recorded all the entries regarding fixed assets in the
books. Complete the amounts denoted by (i) to (iii) on the Fixed Asset Note. (12)

1.2 Refer to information C and D.

Calculate the correct net profit after tax for the year ended 29 February 2024.
Indicate (+) for increase and (-) for decrease, next to each amount. (13)

1.3 Complete the Statement of Financial Position on 29 February 2024. (30)

NOTE: Some amounts are provided in the ANSWER BOOK.

INFORMATION:

A. Fixed assets:
Buildings Vehicles Equipment
R R R
Carrying value: (01/03/2023) 249 850
Cost (i) 436 000
Accumulated depreciation
Movements:
Additions (at cost) 0 260 000 0
Disposals (at carrying value) (420 000) 0 (iii)
Depreciation (ii) (32 000)
Carrying value: (29/02/2024) 9 421 300
Cost 786 000 356 000
Accumulated depreciation

 Depreciation is calculated as follows:

- Vehicles: 15% p.a. on cost
- Equipment: 20% on the diminishing-balance method
 A new vehicle was bought on 1 October 2023.
 Extract from the Fixed Assets Register in respect of equipment sold:
KINOPA MWALIMU 234
Cost price: R80 000
Date purchased: 1 September 2021
Date sold: 31 May 2023 Sold for: R53 000
CARRYING VALUE
28 February 2022 R72 000
28 February 2023 R57 600
31 May 2023 ?

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B. Balances on 29 February 2024:

Fixed assets at carrying value R9 952 480

Ordinary share capital ?
Retained income ?
Loan: PTA Bank ?
Fixed deposit 425 000
Trading stock 1 064 200
Net trade debtors 744 900
Creditors' control 518 950
SARS: Income tax (provisional tax payments) 322 800

C. The bookkeeper has calculated the net profit before tax as R1 150 000.
The pre-adjustment balances to be adjusted are:

Audit fees R144 000

Trading stock 1 064 200
Rent income 287 300
Directors' fees 852 800

Only the adjustments listed below must still be taken into account.

(i) Audit fees of R45 600 were still owing on 29 February 2024.

(ii) A donation of 100 blankets was made to a children's hospital, but the
donation has not been recorded. The business uses the weighted-average
method for valuing blankets. The stock records for blankets reflect the
following:

Quantity
Unit price Total cost
(units)
Purchases during the year: 1 500 R603 000
15 April 2023 600 R330,00 198 000
22 June 2023 900 R450,00 405 000
Sales 1 220
Stock on hand: 29 Feb. 2024 280

(iii) Rent was increased by R1 300 per month from 1 January 2024. Only the rent
for the period 1 March 2023 to 31 January 2024 was received and recorded.

(iv) The company had one director, Jenny, at the beginning of the financial year.
Jenny had been paid in advance for two months. A second director, Frank,
was appointed on 1 December 2023. His monthly fee is 20% lower than that
of Jenny. Frank received the fees due to him.

D. Income tax:

The assessment from SARS indicated total income tax for the financial year as
R351 000, after all adjustments had been made. 2024

12
E. Share capital and dividends:

DATE DETAILS
1 March 2023 2 120 000 shares in issue
30 June 2023 230 000 shares repurchased: The average share price was
R5,90 at the date of the repurchase
29 February 2024 1 890 000 shares in issue

 Interim dividends were not declared during the financial year.

 Final dividends of 25c per share were declared on 29 February 2024 to all
shares in the share register.

F. Transfer of debtor's balance to Creditors' Ledger:

A debtor with a debit balance of R8 400 in the Debtors' Ledger must still be
transferred to his account in the Creditors' Ledger.

G. Loan: PTA Bank

Extract from the Loan Statement from PTA Bank:

Balance on 1 March 2023 R1 400 000

Repayments for the financial year (including interest) ?
Interest capitalised 168 000
Balance on 29 February 2024 1 004 000

NOTE:
 All entries for the repayments and interest have been made.
 Directors expect to maintain the capital repayments made this year, during the
next financial year.
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13
ANSWER SHEET: MAY/JUNE 2024
1.1 FIXED ASSETS

(i) Calculate: Cost price of buildings at the beginning of the year

WORKINGS ANSWER

(ii) Calculate: Depreciation on vehicles

WORKINGS ANSWER

(iii) Calculate: Carrying value on equipment sold

WORKINGS ANSWER

1.2 CORRECT NET PROFIT AFTER TAX FOR THE YEAR

Incorrect net profit before tax 1 150 000

Net profit before tax

Net profit after tax

13
14
1.3 STATEMENT OF FINANCIAL POSITION ON 29 FEBRUARY 2024
ASSETS

NON-CURRENT ASSETS 10 377 480

Fixed assets 9 952 480

Investment: Fixed deposit 425 000

CURRENT ASSETS

Cash and cash equivalents 1 956 220

TOTAL ASSETS

EQUITY AND LIABILITIES

ORDINARY SHAREHOLDERS' EQUITY

Retained income

NON-CURRENT LIABILITIES

CURRENT LIABILITIES

TOTAL EQUITY AND LIABILITIES

30

TOTAL MARKS

55

15
GAUTENG PRELIM 2024: FINANCIAL STATEMENTS (55 marks; 45 minutes)

You are provided with information fo Mnisi Ltd for the financial year ended 29 February 2024.

REQUIRED:

1.1 Complete the Statement of Comprehensive Income (Income Statement) for the
year ended 29 February 2024. (22)

1.2 Complete the Statement of Financial Position (Balance Sheet) on

29 February 2024. (33)

NOTE: Some amounts have been entered in the ANSWER BOOK.

INFORMATION:

A. Balances and Totals on 29 February 2024:

R R
Ordinary share capital ? ?

Retained income 1 038 480 ?

Fixed deposit: MRJ Bank ? 0

Loan: Hlubi Bank 1 624 000 ?

Debtors’ Control 480 390

Provision for bad debts ? 24 000
Trading stock 982 400
SARS: Income tax (provincial tax payments) 1 812 730
Bank (favourable) ?
Creditors’ control 1 024 565
Sales 20 035 000
Cost of sales 11 409 700
Directors’ fees 1 307 840
Rent income 258 300
Audit fees 69 720
Commission income ?
Stationery 68 300
Dividends on ordinary shares 260 000

16
B. Adjustments and additional information:
(i) Commission income for the year has been received in full at a rate of 4% of
total sales revenue.
(ii) Only two thirds (2/3) of the audit fees were paid. The balance will be paid in
March 2024.
(iii) The increase in the provision for bad debts by R6 500, was not recorded.
(iv) Electronic equipment was donated to a local children’s home. Gross profit
of R 22 400 has been forfeited on this stock had it been sold. The mark-up
on this item was 35% on cost. The bookkeeper has not yet recorded this
entry.

(v) The physical stock count on 29 February 2024 revealed the following:
 Trading stock R923 200
 Stationery used for the year R58 520
(vi) The rent was increased by R2 700 on 1 July 2023. Rent is received one
month in advance.
(vii) The director's fee includes R385 520, which is the half yearly fees of Mr
Jabu, the sole director at the beginning of the financial year. An additional
director, appointed on 1 September 2023, received the same fee as Mr
Jabu. Directors' fees increased by 8% on 1 May 2023 and both directors
have been paid their fees for March 2024.
(viii) In the previous years, the business did not have any financial investments.
On 1 May 2023 they invested into a fixed deposit account at 9% interest per
annum. The interest is not capitalised and was correctly recorded.
(ix) Transfer a creditor’s debit balance of R3 200 from the Creditors’ Ledger to
her account in the Debtors' Ledger.
(x) Loan: Hlubi Bank

 All transactions with respect to the loan were recorded.

 Interest on the loan is capitalised.
 A fixed monthly instalment (including interest) was paid in full. The
repayments including interest for the year amounted to R402 000.
NOTE: The capital portion of the repayments will decrease by 5% over the
next financial year.
(xi) Total dividends for the year amounted to R745 000.
(xii) An amount for tax is still receivable from SARS on 29 February 2024.
(xiii) Total capital employed, after all adjustments were processed on
29 February 2024, was R16 176 000.
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17
 18

ANSWER SHEET GAUTENG PRELIM 2024:

QUESTION 1

1.1 Statement of Comprehensive Income for the year ended 29 February 2024

Sales 20 035 000

22
Cost of sales (11 409 700)
Gross profit 8 625 300
Other operating income 2 086 500
Bad debts recovered
Sundry income

Gross operating income 10 711 800

Operating expenses
Insurance
Depreciation
Sundry expenses

Operating profit 6 317 500

Interest income 94 500

Profit before interest expense 6 412 000

Interest expense (162 000)

Profit before income tax 6 250 000

Income tax (1 750 000)

Net profit after tax 4 500 000

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 19

1.2 Statement of Financial Position for the year ended 29 February 2024

ASSETS
NON-CURRENT ASSETS
Fixed assets

CURRENT ASSETS 3 429 700

Trade and other receivables

TOTAL ASSETS

EQUITY AND LIABILITIES

ORDINARY SHAREHOLDERS' EQUITY

NON-CURRENT LIABILITIES

CURRENT LIABILITIES

Trade and other payables

TOTAL EQUITY AND LIABILITIES 33

TOTAL MARKS

19
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20
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NOV 20222 NSC: CASH FLOW STATEMENT AND FINANCIAL INDICATORS

(35 marks; 25 minutes)

2.1 Choose the correct word from those given in brackets. Write only the word next
to the question numbers (2.1.1 to 2.1.3) in the ANSWER BOOK.

2.1.1 (Solvency/Liquidity) is the ability of the business to pay off all debts
using existing assets.

2.1.2 Effective control of income and expenses is a reflection of the

(risk/profitability).

2.1.3 The use of loans to finance a company is known as (returns/gearing).

(3 x 1) (3)

2.2 EAGLE LTD

The information relates to the financial year ended 28 February 2022.

The business is registered with an authorised share capital of 1 800 000 shares.

REQUIRED:

2.2.1 Prepare the Retained Income Note on 28 February 2022. (7)

2.2.2 Calculate the following amounts for the Cash Flow Statement:

 Income tax paid (4)

 Funds used to repurchase shares (5)
 Net change in cash and cash equivalents (4)

2.2.3 Calculate the following financial indicators on 28 February 2022:

 Debt-equity ratio (3)

 % return on average capital employed (5)
 Dividends per share (4)

INFORMATION:

A. Extract: Statement of Comprehensive Income on 28 February 2022:

Sales R11 232 000
Depreciation 428 300
Interest on loan 382 000
Net profit before tax 1 297 700
Income tax 389 300
Net profit after tax 908 400

21
 22

B. Items identified from the Statement of Financial Position on 28 February:

2022 2021
Shareholders' equity 12 350 800 10 750 000
Ordinary share capital 11 968 000 ?
Retained income 382 800 ?
Loan: Lilly Bank 2 886 000 3 700 000
Total capital employed 15 236 800 14 450 000
Cash and cash equivalents 44 700 8 000
Bank 36 700 0
Petty cash 8 000 8 000
SARS: Income tax 14 400 Cr 21 300 Dr
Shareholders for dividends ? 271 400
Bank overdraft 0 133 000

C. Ordinary shares:

NO. OF SHARES
Number of shares on 1 March 2021 1 180 000
Number of shares issued on 1 July 2021 at R9,30 each 300 000
Number of shares repurchased on 1 January 2022 at
120 000
R1,40 above the average share price
Number of shares on 28 February 2022 1 360 000

D. Dividends:
 Interim dividends of R710 400 were paid on 31 August 2021.
 A final dividend of 12 cents per share was declared to all shareholders on the
share register on 28 February 2022.

35

22
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ANSWER SHEET NOV 2022 NSC:

QUESTION 2

2.1 2.1.1
2.1.2
2.1.3 3

2.2 EAGLE LTD

2.2.1 RETAINED INCOME NOTE ON 28 FEBRUARY 2022

Balance on 1 March 2021

Ordinary share dividends

Interim dividends 710 400

Balance on 28 February 2022 382 800 7

2.2.2 Calculate: Income tax paid

WORKINGS ANSWER

4
Calculate: Funds used to repurchase shares
WORKINGS ANSWER

5
Calculate: Net change in cash and cash equivalents
WORKINGS ANSWER

23
 24

2.2.3 Calculate: Debt-equity ratio

WORKINGS ANSWER

3
Calculate: % return on average capital employed
WORKINGS ANSWER

5
Calculate: Dividends per share
WORKINGS ANSWER

TOTAL MARKS

35

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 25

JUNE 2022 NSC FIXED ASSETS, CASH FLOW STATEMENT AND FINANCIAL
INDICATORS (45 marks; 35 minutes)

2.1 Choose the correct word(s) from those given in brackets. Write only the word(s)
next to the question numbers (2.1.1 to 2.1.3) in the ANSWER BOOK.

2.1.1 Unused consumable stores at the end of the financial year are classified
as a (current asset/financial asset).

2.1.2 Interest on loans is regarded as a/an (operating activity/financing

activity).

2.1.3 The (directors' report/audit report) reflects a verbal explanation of the

company's activities and future plans. (3 x 1) (3)

2.2 JANTJES LIMITED

The information relates to the financial year ended 28 February 2022.

REQUIRED:

2.2.1 Refer to Information A.

Calculate the missing figures indicated by (i) to (iii) on the Fixed Asset
Note. (11)

2.2.2 Calculate the following amounts for the 2022 Cash Flow Statement:

 Fixed assets purchased (6)

 Dividends paid (4)

 Decrease in loan (3)

2.2.3 Complete the NET CHANGE IN CASH AND CASH EQUIVALENTS

section of the Cash Flow Statement. (4)

2.2.4 Calculate the following financial indicators on 28 February 2022:

 % mark-up achieved (3)

 Acid-test ratio (4)

 Net asset value per share (NAV) (3)

 % return on average shareholders' equity (ROSHE) (4)

25
 26

INFORMATION:

A. Fixed Asset Note to the Statement of Financial Position (Balance

Sheet):
BUILDINGS VEHICLES EQUIPMENT
FIXED ASSETS
R R R
Carrying value (1 Mar. 2021) (i) 28 000
Cost 6 450 000 2 350 000 640 000
Accumulated depreciation 0 (840 000) (612 000)
Movements
Additions ? 0 195 000
Disposals 0 (iii) 0
Depreciation 0 (298 000) (ii)
Carrying value (28 Feb. 2022)
Cost
Accumulated depreciation

 Extensions to the buildings were completed during the financial year.

 Additional equipment was purchased on 1 October 2021.
 Equipment is depreciated at 10% on cost.
 An old vehicle was sold at carrying value on 30 November 2021.
The cost price of this vehicle was R252 000 and its accumulated
depreciation on 1 March 2021 was R172 000.
 Vehicles are depreciated at 20% p.a. on carrying value.

B. Extract from the Statement of Comprehensive Income for the year

ended 28 February 2022:
Sales R12 600 000
Gross profit 5 400 000
Income tax 295 800
Net profit after tax 609 200

C. Extract from the Statement of Financial Position (Balance Sheet):

28 Feb. 2022 28 Feb. 2021
R R
Fixed assets (carrying value) 8 746 500 7 988 000
Shareholders' equity 8 840 700 7 600 000
Ordinary share capital 8 648 000 7 404 000
Loan: CBC Bank ? 2 057 600
Inventory 514 500 456 000
Petty cash 5 000 5 000
Bank 125 000 (Cr) 129 000 (Dr)
SARS: Income tax 22 500 (Cr) 13 800 (Dr)
Shareholders for dividends 264 500 180 000
Total current assets 1 323 000 1 232 000
Total current liabilities 735 000 592 500

26
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D. Share capital:
 There were 1 000 000 shares in issue on 1 March 2021.
 200 000 shares were issued on 1 May 2021.
 50 000 shares were repurchased on 1 December 2021.

E. Dividends:
 An interim dividend was paid on 31 August 2021.
 A final dividend was declared on 28 February 2022.
 Total dividends for the financial year amounted to R552 500.

F. Loan: CBC Bank

The loan statement received on 28 February 2022 reflected:
 Repayments: R38 000 per month (including interest)
 Total interest capitalised: R216 000

45

27
 28

ANSWER SHEET JUNE 2022 NSC:

2.1 2.1.1
2.1.2
2.1.3 3

2.2 JANTJES LIMITED

2.2.1 WORKINGS ANSWER

(i) Carrying value of vehicles on 1 March 2021

(ii) Total depreciation on equipment

(iii) Carrying value of the vehicle sold

11

2.2.2 Calculate the following amounts for the 2022 Cash Flow Statement:
WORKINGS ANSWER
Fixed assets purchased

6
Dividends paid

4
Decrease in loan

28
 29

.2.3 NET CHANGE IN CASH AND CASH EQUIVALENTS

2.2.4 Calculate the following financial indicators on 28 February 2022:

WORKINGS ANSWER
% mark-up achieved

3
Acid-test ratio

4
Net asset value per share (NAV)

3
% return on average shareholders' equity (ROSHE)

TOTAL MARKS

45

29
 30

NOV 2023 NSC: CASH FLOW STATEMENT AND FINANCIAL INDICATORS

(35 marks; 25 minutes)

The information relates to Sherbiz Ltd for the financial year ended 28 February 2023.

REQUIRED:

2.1 Prepare the Ordinary Share Capital Note. (7)

2.2 Complete the following sections of the Cash Flow Statement:

 Cash flow of operating activities (10)

 Cash flow of financing activities (6)

2.3 Calculate the following financial indicators:

 Net asset value per share (3)

 Dividend payout rate (5)
 % return on average shareholders' equity (4)

30
 31

INFORMATION:

A. Share capital and dividends:

1 March 2022 1 200 000 shares in issue

30 June 2022 An additional 300 000 shares were issued.
1 December 2022 90 000 shares were repurchased from a retired
shareholder. He was paid R0,80 above the average
share price and would no longer qualify for dividends.

B. Information from the Statement of Financial Position on 28 February:

2023 2022
R R
Ordinary shareholders' equity 10 200 000 7 985 500
Ordinary share capital 9 306 000 7 200 000
SARS: Income tax 27 800 (Cr) 42 500 (Dr)
Shareholders for dividends 282 000 ?

C. Loan Statement from Megan Bank:

The annual loan statement for 2023 reflects the following:

 Balance on 28 February 2023: R1 678 600

 Interest capitalised for the financial year: R117 600
 Monthly payments including interest: R22 750

D. Net profit and income tax:

 Net profit after tax amounted to R912 500.

 Income tax is calculated at 27% of the net profit.

E. Dividends and earnings per share:

Final dividends per share on 28 February 2022 24,0 cents

Interim dividends per share paid on 31 August 2022 30,0 cents
Final dividends per share on 28 February 2023 ?
Earnings per share on 28 February 2023 66,2 cents

NOTE: All shareholders in the share register at the financial year-end qualify for
dividends.
35

31
 32
ANSWER SHEET: NOV 2023 NSC

QUESTION 2

SHERBIZ LTD

2.1 ORDINARY SHARE CAPITAL NOTE

1 200 000 Shares in issue on 1 March 2022 7 200 000

2.2 CASH FLOW OF OPERATING ACTIVITIES

Cash generated from operations
Interest paid (117 600)

10

CASH FLOW OF FINANCING ACTIVITIES

32
 33

2.3 Calculate the following financial indicators:

Net asset value per share
WORKINGS ANSWER

3
Dividend payout rate
WORKINGS ANSWER

5
% return on average shareholders' equity
WORKINGS ANSWER

TOTAL MARKS

35

33
 34
NOV 2024 NSC: CASH FLOW STATEMENT AND FINANCIAL INDICATORS
(35 marks; 25 minutes)

The information relates to Eybers Ltd for the financial year ended 29 February 2024.

REQUIRED:

2.1 Prepare the Retained Income Note for the year ended 29 February 2024. (8)

2.2 Complete the Cash Flow Statement for the year ended 29 February 2024. (17)

2.3 Calculate the following financial indicators for the year ended 29 February 2024:

 % operating expenses on sales (3)

 Stock turnover rate (4)
 Interim dividend per share (3)

INFORMATION:

A. Extract from the Statement of Comprehensive Income for the year ended
29 February 2024.

R
Sales 8 240 600
Cost of sales 5 060 000
Gross operating income 3 020 480
Operating expenses 1 360 950
Operating profit 1 659 530
Income tax 462 000
Net profit after tax ?

B. Extract from the Statement of Financial Position on:

29 Feb. 2024 28 Feb. 2023

R R
Cash and cash equivalents ? 36 000
Trading stock 174 000 193 000
SARS: Income tax 66 650 Dr 44 675 Cr
Ordinary shareholders' equity ? 8 733 720
Ordinary share capital ? 8 160 000
Retained income ? 573 720
Loan: Smiley Bank 5 440 000 ?
Shareholders for dividends ? ?
Bank overdraft 0 142 680

34
 35

C. Share capital:

 On 1 March 2023, there were 1 200 000 shares in issue.

 400 000 shares were issued at R10 per share on 30 June 2023.
 On 30 November 2023, 34 000 shares were repurchased at R1,90 (per
share) above the average share price.

D. Dividends and dividend pay-out rate:

 Dividends paid and declared:

DIVIDENDS
Final 28 February 2023 Paid 17 cents per share
Interim 1 September 2023 Paid R416 000
Final 29 February 2024 Declared ?

 Total dividends paid and declared for the year ended 29 February
2024, R744 860.
 The dividends pay-out rate for the year ended 29 February 2024 was 40%
after all transactions were correctly recorded.

E. Loan: Smiley Bank

 Monthly instalments of R97 120, including interest, were paid.

 Interest capitalised amounted to R685 440.

F. Net change in cash and cash equivalents, R296 460 inflow.

35

35
 36

ANSWER SHEET NOV 2024 NSC:

EYBERS LTD

2.1 RETAINED INCOME NOTE FOR THE YEAR ENDED 29 FEBRUARY 2024

Balance at the beginning of the year 573 720

Ordinary share dividends (744 860)

Balance at the end of the year 8

2.2 CASH FLOW STATEMENT FOR THE YEAR ENDED 29 FEBRUARY 2024

CASH FLOW FROM OPERATING ACTIVITIES

17
Cash generated from operations
Interest paid

CASH FLOW FROM INVESTING ACTIVITIES

CASH FLOW FROM FINANCING ACTIVITIES

NET CHANGE IN CASH AND CASH EQUIVALENTS 296 460

CASH AND CASH EQUIVALENTS AT THE

BEGINNING OF THE YEAR

CASH AND CASH EQUIVALENTS AT THE END OF

THE YEAR

36
 37

37
 38

2.3 Calculate the following financial indicators for the year ended
29 February 2024:
% operating expenses on sales
WORKINGS ANSWER

3
Stock turnover rate
WORKINGS ANSWER

4
Interim dividend per share
WORKINGS ANSWER

TOTAL MARKS

35

38
 39
NOV 2022 NSC: INTERPRETATION OF FINANCIAL STATEMENTS
(40 marks; 35 minutes)

3.1 Choose the appropriate item from the list provided to fit EACH purpose below.
Write only the letter (A–D) next to the question numbers (3.1.1 to 3.1.3) in the
ANSWER BOOK.

List of items that would appear in a company's annual report:

A Statement of Comprehensive Income (Income Statement)

B Statement of Financial Position (Balance Sheet)
C Cash Flow Statement
D Directors' Report

NO. PURPOSE
3.1.1 To reflect the effects of operating, investing and financing activities

3.1.2 To provide a written explanation of the financial performance of a

company
3.1.3 To reflect the performance of a company in terms of its gross,
operating and net profit (3)

3.2 JESSIE LTD

The information relates to Jessie Ltd for the financial year ended
28 February 2022.

BACKGROUND INFORMATION:

Mike Stuurman was appointed as the chief financial officer (CFO) on

1 March 2021 as a result of his successful track record of improved
performances at other companies where he had worked previously. He is not a
shareholder of Jessie Ltd.

39
 40

REQUIRED:

NOTE: Provide figures, trends, financial indicators or calculations in EACH

case to support your comments and explanations.

3.2.1 Profitability:

Mike has informed the board of directors that he has identified and
rectified a number of incidents of fruitless and wasteful expenditure in
the company's records. Provide TWO financial indicators that justify
the success of Mike's strategies. (4)

3.2.2 Dividends:

 Explain whether the change in the dividend pay-out rate in 2022

will benefit the company or not. (3)

 Sue Lee, a shareholder who owns 5 000 shares, is satisfied with

the dividends she has received despite the change in the dividend
policy. Explain why she feels this way. (3)

3.2.3 Risk and gearing:

Some shareholders feel that Mike was reckless when he increased

the loan by R3,35 million soon after his appointment as CFO. Explain
why you do not agree with them. Provide TWO points. (6)

3.2.4 Share capital and % shareholding: Refer to Information C and D.

 Calculate Brent's % shareholding on 28 February 2022. (5)

 Brent and Kerina decided that they would combine their votes at
the upcoming annual general meeting (AGM).

o Explain ONE possible reason for this decision, with figures. (3)

o As an existing shareholder, explain why you would be

concerned about the strategy of Brent and Kerina. Provide
TWO points. (4)

3.2.5 Refer to Information A, B and C.

Mike received an offer for the post of CFO at Premier Ltd, at a much
better remuneration package than the current one at Jessie Ltd. The
directors of Jessie Ltd met and proposed that they offer him a better
package than that offered by Premier Ltd.

Explain THREE points relating to the financial results of the company,

besides those mentioned above, that the Remunerations Committee
can use to justify offering Mike an improved package to remain at
Jessie Ltd. (9)

40
 41
INFORMATION:
A. Financial indicators calculated on 28 February:
2022 2021
Mark-up % achieved 70% 60%
% operating expenses on sales 14,8% 27,8%
% net profit on sales 24,7% 10,3%
Solvency ratio 3,6 : 1 5,3 : 1
Debt-equity ratio 0,3 : 1 0,2 : 1
Earnings per share 408 cents 123 cents
Dividends per share 190 cents 120 cents
Dividend pay-out rate 46,6% 97,6%
% return on average shareholders' equity 20,7% 7,3%
% return on average capital employed 16,9% 7,5%
Net asset value per share 1 841 cents 1 685 cents

B. Additional information on 28 February:

2022 2021
Market price of shares on stock exchange 1 920 cents 1 540 cents
Interest rate on loans 7,2% 8,5%
Interest rate on fixed deposits 4,5% 3,5%

C. Issue and repurchase of shares:

Based on Mike's advice, the directors decided to issue additional shares

to existing shareholders at R21,00 per share. Shareholders were
allowed to purchase 10 shares for every 40 shares they owned. All
shareholders exercised this right.

NO. OF SHARES
Number of shares in issue on 1 March 2021 1 300 000
Number of shares repurchased on 31 August 2021 240 000
Number of new shares issued to existing shareholders
on 28 February 2022 at R21,00 per share (these 265 000
shares do not qualify for 2022 dividends)
Number of shares in issue on 28 February 2022 1 325 000

D. Extract from shareholders' register:

Brent Flower and Kerina Moss are shareholders in the company

but not directors. None of their shares were repurchased on
31 August 2021.

BRENT KERINA
TOTAL
FLOWER MOSS
Number of shares they owned on
300 000 280 000 580 000
1 March 2021
% shareholding on 1 March 2021 23,1% 21,5% 44,6%
% shareholding on 28 February 2022 ? 26,4% ?

40

41
 42

ANSWER SHEET NOV 2022 NSC:

QUESTION 3

3.1
3.1.1

3.1.2

3.1.3 3

3.2 JESSIE LTD

3.2.1 Mike has informed the board of directors that he has identified and
rectified a number of incidents of fruitless and wasteful expenditure in
the company's records. Provide TWO financial indicators that justify the
success of Mike's strategies. Quote figures and trends.

POINT 1

POINT 2
4

3.2.2 Explain whether the change in the dividend pay-out rate in 2022 will
benefit the company or not. Quote figures and trends.

3
Sue Lee, a shareholder who owns 5 000 shares, is satisfied with the
dividends she has received despite the change in the dividend policy.
Explain why she feels this way. Quote figures and trends.

42
 43

3.2.3 Some shareholders feel that Mike was reckless when he increased the
loan by R3,35 million soon after his appointment as CFO. Explain why
you do not agree with them. Provide TWO points, with financial
indicators, figures and trends.

POINT 1

POINT 2
6

3.2.4 Refer to Information C and D.

Calculate Brent's % shareholding on 28 February 2022.
WORKINGS ANSWER

5
Brent and Kerina decided that they would combine their votes at the
upcoming annual general meeting (AGM).
Explain ONE possible reason for this decision, with figures.

3
As an existing shareholder, explain why you would be concerned about
the strategy of Brent and Kerina. Provide TWO points.

POINT 1

POINT 2

43
 44

3.2.5 Refer to Information A, B and C.

Explain THREE points relating to the financial results of the company,

besides those mentioned above, that the Remunerations Committee
can use to justify offering Mike an improved package to remain at
Jessie Ltd. Quote relevant financial indicators, figures and trends.

POINT 1

POINT 2

POINT 3

TOTAL MARKS

40

44
 45

NOV 2023 NSC: INTERPRETATION OF FINANCIAL INFORMATION

(45 marks; 35 minutes)

GUARDIAN LTD AND NAVARRA LTD

The information relates to TWO companies.

REQUIRED:

NOTE: Where comments or explanations are required, you should:

 Quote financial indicators and trends with figures
 Give a reason or an explanation for the financial indicators quoted

3.1 Choose an explanation from COLUMN B that matches the individual or term in
COLUMN A. Write only the letter (A–D) next to the question numbers
(3.1.1 to 3.1.3) in the ANSWER BOOK.

COLUMN A COLUMN B
3.1.1 Director A no opinion was expressed on the
financial position of the company
3.1.2 Unqualified audit report
B the person who invests funds in a
3.1.3 Shareholder company

C manages the operating, financing and

investing activities of a company

D the financial statements fairly present

the financial position of the company
(3 x 1) (3)

3.2 Liquidity:

Identify the company that is managing its working capital well. Quote TWO
financial indicators. (5)

3.3 Financing strategies and gearing: Guardian Ltd

 What were the causes of the change in the debt-equity ratio? Provide TWO
causes with figures. (4)

 Explain why it was wise for the company to make more use of loans. Quote
and explain ONE other financial indicator to support this opinion. (4)

3.4 Dividends, earnings and returns: Navarra Ltd

 Explain ONE financial indicator which indicates that a concerned

shareholder should not be satisfied with the change in the dividend policy of
the company. (3)

 Explain whether the shareholders should be satisfied with the earnings and
returns of the company. Quote TWO financial indicators. (6)

45
 46

3.5 Shareholding of Nathan Crewe in Navarra Ltd:

 Identify the effect that the repurchase of Nathan's shares had on his
% shareholding. (2)
 Explain how the company was able to raise approximately R4,4 million to
finance the repurchase of shares and the dividends earned by
shareholders. Provide TWO points. (4)
 Give TWO reasons why the decision to repurchase Nathan's shares should
be considered as irresponsible. (4)

3.6 Directorship:
 'The CFO (chief financial officer) has a significant influence on the success
of a company.'

Explain why you would agree with this statement. (2)

 Explain whether the directors should be satisfied or not with the share
prices of the companies at the end of the financial year. Quote TWO
financial indicators in EACH case. (6)
 The CEO (chief executive officer) of Guardian Ltd intends to offer the
vacant position of CFO to Nathan Crewe in March 2023. Explain ONE point
of advice to the CEO. (2)

INFORMATION:
A. Background information:
 The financial statements of Navarra Ltd have not yet been audited.
 Sheryl Mabaso is the CFO of Guardian Ltd and Nathan Crewe is the CFO of
Navarra Ltd. Sheryl will retire in March 2023.

B. Extracts from the records for the financial year ended on 28 February:
GUARDIAN LTD NAVARRA LTD
2023 2022 2023 2022
Number of shares in issue at
1 200 000 1 200 000
beginning of year
New shares issued/repurchased
800 000 (300 000)
on 31 August 2022
Number of shares in issue at
2 000 000 900 000
end of year
Issue price of new shares R11,20
Share repurchase price R11,50

R R R R
Ordinary share capital 20 960 000 12 000 000 9 000 000 12 000 000
Mortgage loan 5 000 000 3 600 000 6 500 000 3 000 000
Bank (favourable) 850 000 250 000 380 000
Bank (overdraft) 3 200 000

46
 47

C. Extracts from the Shareholders' Registers:

Repurchase of shares:

Nathan convinced the other directors of Navarra Ltd that the company should
repurchase 300 000 of his shares for R3 450 000 on 1 September 2022. Note that
interim dividends were paid on 31 August 2022.

Shareholding of CFOs:
GUARDIAN LTD NAVARRA LTD
2023 2022 2023 2022
Sheryl Mabaso 350 000 350 000
Nathan Crewe 362 000 662 000
% shareholding 17,5% 29,2% 40,2% 55,2%

D. Financial indicators, market prices of shares and interest rates:

GUARDIAN LTD NAVARRA LTD
28 Feb. 28 Feb. 28 Feb. 28 Feb.
2023 2022 2023 2022
Dividend payout rate 46,7% 33,0% 103,8% 34,8%
Earnings per share 150c 106c 80c 115c
Dividends per share 70c 35c 83c 40c
Interim dividends per share 45c 65c
Final dividends per share 25c 18c
Current ratio 1,7 : 1 1,5 : 1 0,9 : 1 2,5 : 1
Acid-test ratio 1,2 : 1 1,0 : 1 0,2 : 1 1,4 : 1
Debtors' collection period 19 days 22 days 45 days 40 days
Creditors' payment period 50 days 48 days 55 days 60 days
Debt-equity ratio 0,2 : 1 0,3 : 1 0,6 : 1 0,2 : 1
% return on capital employed 16,6% 13,5% 11,3% 14,8%
% return on shareholders' equity 12,1% 10,5% 6,4% 11%
Net asset value per share 1 230c 1 110c 992c 1 095c

Interest rate on loan 14% 13% 14% 13%

Interest rate on fixed deposit 9% 8% 9% 8%
Market price per share 1 350c 1 150c 400c 1 800c

45

47
 48

ANSWER SHEET NOVEMBER 2023 NSC

3.1 3.1.1
3.1.2
3.1.3 3

3.2 Liquidity:

Identify the company that is managing its working capital well. Quote
TWO financial indicators with figures and trends.

3.3 Financing strategies and gearing: Guardian Ltd

What were the causes of the change in the debt-equity ratio? Provide
TWO causes with figures.

4
Explain why it was wise for the company to make more use of loans.
Quote and explain ONE other financial indicator (with figures and
trends) to support this opinion.

48
 49

3.4 Dividends, earnings and returns: Navarra Ltd

Explain ONE financial indicator which indicates that a concerned
shareholder should not be satisfied with the change in the dividend
policy of the company. Quote figures and trends.

3
Explain whether the shareholders should be satisfied with the earnings
and returns of the company. Quote TWO financial indicators with
figures and trends.

6
3.5 Shareholding of Nathan Crewe in Navarra Ltd:
Identify the effect that the repurchase of Nathan's shares had on his %
shareholding. Quote figures and trends.

2
Explain how the company was able to raise approximately R4,4 million
to finance the repurchase of shares and dividends earned by
shareholders. Provide TWO points. Quote figures.

4
Give TWO reasons why the decision to repurchase Nathan's shares
should be considered as irresponsible.

49
 50
3.6 Directorship:

'The CFO (chief financial officer) has a significant influence on the

success of a company.' Explain why you would agree with this
statement.

2
Explain whether the directors should be satisfied or not with the share
prices of the companies at the end of the financial year. Quote TWO
financial indicators in EACH case with figures and trends.

GUARDIAN LTD

NAVARRA LTD

6
The CEO (chief executive officer) of Guardian Ltd intends to offer the
vacant position of CFO to Nathan Crewe in March 2023. Explain ONE
point of advice to the CEO.

TOTAL MARKS

45

50
JUNE 2022 NSC: INTERPRETATION OF FINANCIAL INFORMATION
(45 marks; 35 minutes)
You are provided with information relating to two furniture companies, Vrede Ltd and
Nigel Ltd, for the financial year ended 30 April 2022.

The directors of both companies have been trying to improve their results after tough
trading times in 2020/2021, but they are using different strategies in the 2022 financial
year:

 The directors of Vrede Ltd decided to persist with a conservative approach.

 The directors of Nigel Ltd decided to change to a more aggressive approach.

REQUIRED:
NOTE: Provide figures, financial indicators or calculations in EACH case to support
your comments and explanations.

3.1 Profitability/Operating efficiency:

Refer to Information A.

Identify and explain which company has been more efficient in controlling its
operating activities. Quote TWO financial indicators. (5)
3.2 Liquidity:

Refer to Information A.

 Identify and explain which company has better liquidity financial indicators.
Quote TWO financial indicators. (3)
 Explain ONE concern you have about the liquidity of the other company.
Quote ONE financial indicator. (2)
3.3 Dividends:

Refer to Information A.

Comment on the difference between the dividend pay-out policies implemented

by the directors of the two companies and explain ONE possible reason for
EACH of their decisions in their respective companies. Quote figures or
indicators. (6)
3.4 Gearing, risk, financing and investing activities:
Refer to Information A, B and C.

 Explain the specific decisions taken by the directors of EACH company that
have affected gearing and risk. Quote rand amounts.
 Comment on the gearing and risk of Nigel Ltd. Quote TWO financial indicators. (4)
 At the Nigel Ltd AGM, an angry shareholder said that the directors' (4)
aggressive strategies would probably lead to the failure of the company in
future. Explain TWO points why the shareholder might feel this way.
(5)
 52
3.5 Shareholders' assessment of market prices of shares:

Refer to Information A and B.

Shareholders of Vrede Ltd are not satisfied with the market price of their shares,
whereas the shareholders of Nigel Ltd are satisfied. Explain by quoting figures or
indicators and, for EACH company, identify a factor that would have affected the
market price of the shares. (6)

3.6 Shareholding of Jay Sonto in Vrede Ltd and Nigel Ltd:

Refer to Information B and D.

Jay invested a total of R10,2 m in the companies in 2019. He is unsure whether

changes in his shareholding and share prices have benefited him. Jay wants to
sell 19 000 of his Nigel Ltd shares on the JSE.

 Provide calculations to show the change in Jay's % shareholding in Nigel Ltd

over the financial year. Comment on his % shareholding in EACH company. (4)
 Calculate the total profit or loss he is currently making on his shares in EACH
company. Advise if it is wise to sell 19 000 shares in Nigel Ltd, or not. (6)

52
 53
INFORMATION:

A. FINANCIAL INDICATORS VREDE LTD NIGEL LTD

2022 2021 2022 2021
% operating expenses on sales 23,9% 23,0%
% operating profit on sales 13,6% 19,9%
% net profit on sales 7,0% 9,2%
Current ratio 1,8 : 1 1,2 : 1
Acid-test ratio 0,7 : 1 0,5 : 1
Stock turnover rate 11 times 12 times 23 times 12 times
Debt-equity ratio 0,3 : 1 0,5 : 1 1,3 : 1 0,6 : 1
Net asset value per share R32,95 R23,08
Earnings per share R2,54 R4,10
Dividends per share R1,90 R1,40 R4,40 R2,80
Dividend pay-out rate 74,8% 107,4%
% return on shareholders' equity 7,8% 11,2% 16,8% 10,4%
% return on total capital employed 10,5% 16,2%

B. SHARE PRICES, EQUITY, LOANS AND VREDE LTD NIGEL LTD

INTEREST 2022 2022
Average issue price R31,00 R24,00
Market price on stock exchange (date) R24,00 R32,00
Repurchase price per share R0,00 R29,00
Interest rate on loans 12,0% 12,0%
Interest expense R900 000 R2 100 000
Loans at year-end R7 500 000 R17 500 000
Shareholders' equity at year-end R29 654 000 R13 846 000

C. EXTRACT FROM CASH FLOW STATEMENT VREDE LTD NIGEL LTD

2022 2022
Financing activities R7 400 000 R(4 540 000)
300 000 new shares issued 9 900 000 0
260 000 shares repurchased 0 (7 540 000)
Change in loan (2 500 000) 3 000 000
Investing activities (3 300 000) 880 000
Change in fixed assets (3 100 000) 730 000
Change in investments (200 000) 150 000

D. SHAREHOLDING OF JAY SONTO IN EACH

VREDE LTD NIGEL LTD
COMPANY
Shares owned by Jay Sonto since 2019: 200 000 shares 320 000 shares
1 May 2021 33,3% 37,2%
% shareholding on:
30 April 2022 22,2% ?
Price paid per share on: 1 May 2019 R27,00 R15,00
1 May 2021 600 000 shares 860 000 shares
Total shares in issue on:
30 April 2022 900 000 shares 600 000 shares

45

53
 54
ANSWER SHEET JUNE 2022 NSC:
3.1 Profitability/Operating efficiency:
Identify and explain which company has been more efficient in
controlling its operating activities. Quote TWO financial indicators.

3.2 Liquidity:
Identify and explain which company has better liquidity financial
indicators. Quote TWO financial indicators.

3
Explain ONE concern you have about the liquidity of the other company.
Quote ONE financial indicator.

3.3 Dividends:
Comment on the difference between the dividend pay-out policies
implemented by the directors of the two companies and explain ONE
possible reason for EACH of their decisions in their respective
companies. Quote figures or indicators.
COMMENT ON POLICIES POSSIBLE REASON
(with figures) FOR DECISION

VREDE LTD

NIGEL LTD

54
 55

3.4 Gearing, risk, financing and investing activities:

Explain the specific decisions taken by the directors of EACH company
that have affected gearing and risk. Quote rand amounts.

VREDE LTD

NIGEL LTD
4
Comment on the gearing and risk of Nigel Ltd. Quote TWO financial
indicators.

4
At the Nigel Ltd AGM, an angry shareholder said that the directors'
aggressive strategies would probably lead to the failure of the company
in future. Explain TWO points why the shareholder might feel this way.

3.5 Shareholders' assessment of market prices of shares:

Explain by quoting figures or indicators and, for each company, identify
a factor that would have affected the market price of the shares.

VREDE LTD

NIGEL LTD

55
 56

3.6 Shareholding of Jay Sonto in Vrede Ltd and Nigel Ltd:

Provide calculations to show the change in Jay's % shareholding in
Nigel Ltd over the financial year.

Comment on his % shareholding in EACH company.

VREDE LTD

NIGEL LTD
4
Calculate the total profit or loss he is currently making on his shares in
EACH company.
VREDE LTD NIGEL LTD

Advise if it is wise to sell 19 000 shares in Nigel Ltd, or not.

TOTAL MARKS

45

56
 57

NOV 2024 NSC: INTERPRETATION OF FINANCIAL INFORMATION

(45 marks; 35 minutes)

WINSTON LTD

The information relates to Winston Ltd for the year ended 29 February 2024.

REQUIRED:

NOTE: Where comments or explanations are required, you should:

 Quote financial indicators and trends with figures
 Give a reason or an explanation for the financial indicators quoted

3.1 Profitability:

Quote TWO financial indicators with figures and trends to indicate that the
company is managing its expenses well.

(4)

3.2 Dividend pay-out policy:

Comment on the dividend pay-out policy of the company. Explain why this is a
responsible change in policy. Provide ONE point.

(3)

3.3 Earnings and returns:

Explain whether the shareholders should be satisfied or not with the earnings per
share and returns on average shareholders' equity of the company. Quote TWO
financial indicators with figures.

(4)

3.4 Financing strategies and gearing:

 Refer to information C.
The directors decided to buy new fixed assets in 2024 to enhance the
company.

Identify the TWO main sources (over R1m) that were used to finance this
purchase. Provide figures.

(4)

 Explain how the decisions affected the risk and gearing of the company. Quote
TWO financial indicators with figures.
(6)
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3.5 Grant Waters' % shareholding, rights issue and shares repurchased:

 Refer to Information B.
Calculate the number of shares that Grant bought through the rights issue on
31 October 2023. (3)

 Calculate Grant's % shareholding after the rights issue on 29 February 2024. (5)

 Calculate the total amount that Grant spent on the shares he acquired
through the rights issue.
NOTE: No shares were repurchased during the financial year. (4)

 Grant intends to convince the board of directors to repurchase shares from

him in the next financial year at R12 per share. Explain why the other
board members would probably vote against this transaction proposed by
Grant.
Provide TWO points (with figures). (4)

3.6 Role of the CEO:

 Explain TWO characteristics that shareholders would expect of a good CEO. (4)

 Apart from the factors and financial indicators covered in the previous
questions, identify and explain TWO other points indicating that the company
is well managed by the CEO. Quote figures. (4)

INFORMATION:

A. Background information:

 The chief executive officer (CEO), Shakira Solomon, was appointed on

1 October 2023.
 She was awarded a one-year contract, on probation.
 Grant Waters, the majority shareholder, was instrumental in appointing the
CEO on 1 October 2023.

B. Share capital and rights issue:

 3 000 000 shares were already in issue on 1 March 2023.

 Grant Waters' shareholding:

He is the majority shareholder and owned 1 620 000 of the issued shares on
1 March 2023.

Rights issue:

 On 31 October 2023, each shareholder was offered 10 shares for every

50 shares that they owned at a reduced price. All shareholders exercised this
right. No other shares were issued or repurchased during the financial
year.

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C. Extract from the Notes and Statement of Financial Position as at:
29 Feb. 2024 28 Feb. 2023
Fixed assets purchased R8 235 000 R4 180 000
Fixed assets sold 710 000 0
Fixed deposit: Caledon Bank 550 000 250 000
Ordinary share capital 31 770 000 28 800 000
Loan: Main Bank 12 913 000 9 400 000

D. Financial indicators, market prices of shares, interest rates and other

financial data:

29 Feb. 2024 28 Feb. 2023

Mark-up percentage 45% 40%
% operating expenses on sales 14% 19%
% operating profit on sales 18% 12%
% net profit before tax on sales 19% 11%
Solvency ratio 3,8 : 1 2,8 : 1
Current ratio 2,5 : 1 1,6 : 1
Acid-test ratio 1,9 : 1 1,2 : 1
Net asset value per share 564 cents 460 cents
Dividends per share 67 cents 89 cents
Earnings per share 112 cents 104 cents
Dividend pay-out rate 60% 86%
Return on average shareholder's equity 20% 11%
Debt-equity ratio 0,2 : 1 0,5 : 1
% return on average capital employed 24% 15%

Market value per share 950 cents 820 cents

% growth (drop) in net asset value per
+15,9% - 8,9%
share
Interest rate on loans 12% 12%
Interest rate on fixed deposits 7,5% 6,5%

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57
ANSWER SHEET NOV 2024 NSC:
3.1 Profitability:

Quote TWO financial indicators with figures and trends to indicate that
the company is managing its expenses well.

3.2 Dividends pay-out policy:

Comment on the dividend pay-out policy of the company. Explain why

this is a responsible change in policy. Provide ONE point.

3.3 Earnings and returns:

Explain whether the shareholders should be satisfied or not with the

earnings per share and returns on average shareholders' equity of the
company. Quote TWO financial indicators with figures.

58
3.4 Financing strategies and gearing:

Refer to Information C.

The directors decided to buy new fixed assets in 2024 to enhance the
company. Identify the TWO main sources (over R1m) that were used to
finance this purchase. Provide figures.

4
Explain how the decisions affected the risk and gearing of the
company. Quote TWO financial indicators with figures.

3.5 Grant Waters' % shareholding, rights issue and shares repurchased:

Calculate:

Refer to Information B.

The number of shares that Grant bought through the rights issue on
31 October 2023
WORKINGS ANSWER

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Grant's % shareholding after the rights issue on 29 February 2024
WORKINGS ANSWER

The total amount that Grant spent on the shares he acquired through
the rights issue
NOTE: No shares were repurchased during the financial year.
WORKINGS ANSWER

Grant intends to convince the board of directors to repurchase shares

from him in the next financial year at R12 per share. Explain why the
other board members would probably vote against this transaction
proposed by Grant. Provide TWO points (with figures).

60
3.6 Role of the CEO:

Explain TWO characteristics that shareholders would expect of a good

CEO.

Apart from the factors and financial indicators covered in the previous
questions, identify and explain TWO other points indicating that the
company is well managed by the CEO. Quote figures.

TOTAL MARKS

45

61
NOV 2020 NSC: CORPORATE GOVERNANCE (15 marks; 10 minutes)

Shareholders and employees associated with a company will be particularly

interested in whether the company is well governed and managed by the directors.

At the AGM, the shareholders will elect two types of directors:

 Executive directors: They attend board meetings and work at the company on a
full-time basis.
 Non-executive directors: They attend board meetings and do NOT work at the
company.

You are provided with four aspects of corporate governance that will be of concern to
the stakeholders.

REQUIRED:

4.1 Audit Report:

Explain why a qualified audit report is not a good reflection of a company.
Provide TWO points. (4)

4.2 The Board of Directors:

Explain why it is important for a company to include non-executive as well as
executive directors on the Board of Directors. (4)

4.3 The Remunerations Committee:

According to the Companies Act, 2008 (Act 11 of 2008), a company must
have a Remunerations Committee.
Explain the role/responsibility of this committee and give a reason why this
committee is necessary. (3)

4.4 Directors engage with clients on a regular basis in an effort to

negotiate contracts and to increase sales and services.

Explain why there should be a company policy that directors must declare to
the Board all gifts, donations or favours received by them from clients. Provide
TWO points. (4)

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62
ANSWER SHEET NOV 2020 NSC:

4.1 Explain why a qualified audit report is not a good reflection of a

company. Provide TWO points.

4.2 Explain why it is important for a company to include non-executive as

well as executive directors on the Board of Directors.

4.3 According to the Companies Act, 2008 (Act 11 of 2008), a company

must have a Remunerations Committee.

Explain the role/responsibility of this committee and give a reason why

this committee is necessary.

EXPLANATION:

REASON:

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4.4 Directors engage with clients on a regular basis in an effort to
negotiate contracts and to increase sales and services.

Explain why there should be a company policy that directors must

declare to the Board all gifts, donations or favours received by them
from clients. Provide TWO points.

TOTAL MARKS

15

NOV 2021 NSC: CORPORATE GOVERNANCE (20 marks; 20 minutes)

4.1 Explain why a disclaimer audit report would be bad for a company's reputation.
Provide TWO points. (4)

4.2 One of the most important decisions that shareholders have to make at the
annual general meeting (AGM) is to appoint directors to serve on the board.

 Explain why the shareholders have been given this responsibility. (2)
 If you were a shareholder, what factors or characteristics would you want to
find out about the directors who would get your vote? Explain TWO points
and give a reason for EACH. (6)

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4.3 A recent news report stated that a major company, Baxco Ltd, had
been awarded a tender to supply equipment worth R20 m to a chain of
private hospitals. The report accuses the CFO (chief financial officer) of that
company of paying R2 m in cash to the CEO of the hospital group.

As a shareholder, explain what you would say at the AGM. Provide TWO
points. (4)

4.4 A major South African company has stated the following on its website and
in its Directors' Report.

We have set up ways for employees and external stakeholders to report

unethical conduct and incidents of individuals not complying with the
company's ethical policies.

We have set up a tip-off phone line (call centre) controlled by an independent

service provider.

All information will be treated confidentially. Whistle-blowers (informants) who

submit genuine information will be protected and will remain anonymous.

In your opinion, explain why this major company found it necessary to

implement this policy. Provide TWO points. (4)

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 ANSWER SHEET NOV 2021 NSC

4.1 Explain why a disclaimer audit report would be bad for a company's
reputation. Provide TWO points.

POINT 1

POINT 2
4

4.2 One of the most important decisions that shareholders have to make at
the annual general meeting (AGM) is to appoint directors to serve on the
board.
If you were a shareholder, what factors or characteristics would you
want to find out about the directors who would get your vote? Explain
TWO points and give a reason for EACH.
EXPLANATION REASON

POINT 1

POINT 2

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4.3 A recent news report stated that a major company, Baxco Ltd, had been
awarded a tender to supply equipment worth R20 m to a chain of private
hospitals. The report accuses the CFO (chief financial officer) of that
company of paying R2 m in cash to the CEO of the hospital group.

As a shareholder, explain what you would say at the AGM. Provide TWO
points.

4.4 Refer to the question paper for an extract from the website and
Directors' Report of a major South African company.

In your opinion, explain why this major company found it necessary to

implement this policy. Provide TWO points.

TOTAL MARKS

20

NOV 2023 NSC: CORPORATE GOVERNANCE (15 marks; 15 minutes)

67
You are provided with an article relating to an internal auditor who lost her job. Use the
information presented and your knowledge on companies to answer the questions.

REQUIRED:
4.1 Auditing:
 Explain ONE duty of an internal auditor. (2)
 Give ONE reason why the accounting records of a listed company must be
audited by an external auditor. (2)
4.2 Whistle-blowers (Informants):
What would you say to Sally regarding her statement in the first paragraph
about whistle-blowers not being willing to take a stand against corruption?
Explain ONE point. (2)
4.3 Shareholders' opinions and concerns:
As a shareholder, explain THREE points that would concern you about the
actions of the board of directors of Monaco Ltd. In EACH case, give a suitable
reason for your concern. (9)

INFORMATION:
MONACO LTD: A WHISTLE-BLOWER'S STORY
Eight months ago, the internal auditor of Monaco Ltd, Sally Bolden, was shocked to
learn that she had been fired from her well-paid position in the company. She had
exposed her bosses, new board chairperson, Glen Turner, and chief financial officer
(CFO), Rachel Donovan, for irregular payments of R3 500 million to companies linked to
them. Sally remains unemployed and is battling to support her family. She and other
whistle-blowers now regret taking a stand against corruption.

Sally's introduction of new internal control measures and her role in replacing
non-performing suppliers and service providers with competent ones had greatly
benefitted the company. A loss of R500 million in 2021 had been converted into a profit
of R280 million in 2022.

However, Sally's problems started when a new board of directors, chaired by Turner,
was appointed.

When asked to comment, Turner said that Sally Bolden's employment had been
terminated for bringing the company into disrepute. He added that the board would
conduct an investigation into identifying the other whistle-blowers.

In recent developments the external auditors of Monaco Ltd found that a further amount
of R200 million had been paid to other individuals linked to Turner and Donovan through
irregular procurement deals and that they (Turner and Donovan) had allegedly
manipulated company policies to appoint their friends to the new board.

15

NOV 2023 NSC: CORPORATE GOVERNANCE

68
4.1 Auditing:

Explain ONE duty of an internal auditor.

2
Give ONE reason why the accounting records of a listed company
must be audited by an external auditor.

4.2 Whistle-blowers (Informants):

What would you say to Sally regarding her statement in the first
paragraph about whistle-blowers not being willing to take a stand
against corruption? Explain ONE point.

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4.3 Shareholders' opinions and concerns:

As a shareholder, explain THREE points that would concern you about

the actions of the board of directors of Monaco Ltd. In EACH case,
give a suitable reason for your concern.
CONCERN REASON

TOTAL MARKS

15

70
NOV 2024 NSC: CORPORATE GOVERNANCE (15 marks; 15 minutes)

You are provided with an extract of the independent external audit report of Valiant
Ltd, presented to the shareholders at the Annual General Meeting.

REQUIRED:

NOTE: In your answers, do NOT repeat your responses in the different questions.

4.1 Explain the role of an independent external auditor. Provide ONE point. (2)

4.2 Choose the correct word from those in brackets. Write the answer in the
ANSWER BOOK and explain your choice.

Valiant Ltd received a/an (qualified/unqualified/disclaimer of opinion) audit report. (2)

4.3 What kind of audit evidence does the independent external auditor examine to
verify the fixed assets of a company? Provide TWO points.

4.4 What are the implications of this audit report for the following:

 Directors
 Shareholders

State ONE point in each case. (4)

4.5 State THREE possible consequences for the independent external auditor if he
was influenced by the directors of the company to deliberately provide the
shareholders with an incorrect audit report. (3)

INFORMATION:

Extract from the independent external auditor's report on the financial

statements of Valiant Ltd:

Audit Opinion:

In our opinion the financial statements present fairly, in all material respects, the financial
position of the company as at 29 February 2024 …

Basis for Audit Opinion:

… and the audit evidence obtained is sufficient and appropriate to provide a basis for our
opinion.

15

71
ANSWER SHEET NOV 2024 NSC:

4.1 Explain the role of an independent external auditor. Provide ONE point.

4.2 Choose the correct word from those in brackets. Write the answer and
explain your choice.

Valiant Ltd received a/an (qualified/unqualified/disclaimer of opinion)

audit report.
AUDIT REPORT EXPLANATION

4.3 What kind of audit evidence does the independent external auditor
examine to verify the fixed assets of a company? Provide TWO points.

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4.4 What are the implications of this audit report for the following:

 Directors
 Shareholders

State ONE point in each case.

IMPLICATIONS

Directors

Shareholders

4.5 State THREE possible consequences for the independent external

auditor if he was influenced by the directors of the company to
deliberately provide the shareholders with an incorrect audit report.

TOTAL MARKS

15

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